Eurotunnel agrees outline accord on debt

 

CHANNEL Tunnel operator Eurotunnel reached an outline agreement with six bank lenders last night to restructure debt and interest totalling some 70 billion French francs (£9.3 billion).

The agreement reached between Eurotunnel and its creditor banks will give the banks control of 49 per cent of the company's capital and oblige Eurotunnel to reimburse all the remaining debt, a source said yesterday.

Eurotunnel, which runs the trains going through the tunnel under the English Channel, reached an agreement Tuesday with its banks to restructure the debt, using sophisticated and almost unprecedented financial instruments, namely that the banks could convert some of the debt in Eurotunnel stock.

The key is that Eurotunnel will be responsible for all its debt, with none of it being wiped out.

The stock purchase price for the banks will be below that when stock was last offered in 1994 at 54.5 a share, as this price was based on revenue and traffic that did not materialise.

The plan has yet to be approved by the board of Eurotunnel and by the banks representing 225 creditor banks, Eurotunnel said.

Details of the plan to restructure the company's debts would be published Monday.